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European Automakers Hope Technology Can Lure Younger Buyers

September 6, 2013 by

With sales at their lowest level in two decades, auto industry managers gathering for the Frankfurt auto show next week will be doing their best to focus on shiny new technologies rather than on the European car market, which, in contrast to the thriving market in the United States, is in a terrible state.

The buzz at the show, which opens to the public on Wednesday, is likely to be about new battery-powered cars and vehicles that are able to drive themselves. Those are more cheerful topics than auto sales, which have fallen 20 percent in Western Europe since the financial crisis began in 2008 and are at their lowest level since 1993.

Only European carmakers with substantial sales in the United States or China — BMW, Mercedes and Volkswagen — have escaped relatively unscathed.

The emphasis on technology is more than just a distraction from market misery. Carmakers are desperate for ways to excite young buyers, who are increasingly apathetic about car ownership. The push toward cars that are rechargeable and loaded with software is part of a search to make automobiles as essential to young adults as smartphones. Otherwise, there is a big risk that auto sales may never reach their previous peaks even if the European economy keeps improving.

“There are products that are hipper for young people than cars,” said Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen in northern Germany and an industry analyst. “The car companies are still using the old marketing pitch — more horsepower. That doesn’t speak to young people any more.”

Interest in battery-powered cars has faded after disappointing initial sales, but it could pick up again this year with the market introduction of the BMW i3. The vehicle has perhaps the most revolutionary new design by an established carmaker in years, not only because of its electric propulsion system but also because the passenger compartment is made of carbon fiber rather than steel, to save weight and extend the distance the car can travel between charges.

There is also speculation that Continental, a German parts supplier, will announce an alliance with Google next week to further develop self-driving cars. A spokesman for Continental, which will hold a news conference at the auto show on Tuesday, declined to comment.

As such initiatives illustrate, it is no longer enough for a car to take a person from one place to another without breaking down. A car must be green, so the owner does not feel guilty driving it. And being in the car should not interrupt the perpetual connectivity that many younger people take for granted.

BMW is going to extremes to make the i3 the most carbon-neutral car on the road. A wind turbine outside the BMW factory in Leipzig provides power for the i3 assembly line, and the carbon fiber for the passenger compartment comes from a factory in Washington State that uses hydropower. And of course the i3 itself has no tailpipe emissions (unless buyers choose a range-extender version that has a small gasoline motor).

With a price of about $42,000 in the United States, the i3 will be an option only for higher-end buyers when it arrives in showrooms by the middle of next year, though government incentives could lower the price by more than $7,000. But since BMW’s clientele already tends to be wealthy and urban, the company may be in a better position than other carmakers to find a market.

“What the mobile phone did for communication, electric mobility will do for individual mobility,” Norbert Reithofer, the chief executive of BMW, said during an introduction event for the i3 in New York in July.

Despite Mr. Reithofer’s enthusiasm, no one expects battery-powered cars to sell in large numbers soon, and certainly not to solve the industry’s deep-seated problems. About 77,000 electric vehicles were sold in the United States in the last 12 months, far more than in any other country, according to Roland Berger Strategy Consultants in Munich. That number, which includes cars like the Chevy Volt that have range-extender motors, is tiny compared with the 14.5 million cars of all types sold in the United States last year.

Modest expectations may also be in order for self-driving cars. Cars are coming on the market that can relieve drivers of some of the tedium of driving in traffic or on the highway. The latest edition of the Mercedes-Benz S-Class, introduced this year, can steer and brake autonomously in traffic or on the autobahn.

Article source: http://www.nytimes.com/2013/09/07/business/global/carmakers-hope-technology-lures-younger-buyers.html?partner=rss&emc=rss

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Voice-Activated In-Car Systems Are Called Risky

June 12, 2013 by Leave a Comment

These systems let drivers use voice commands to dictate a text, send an e-mail and even update a Facebook page. Automakers say the systems not only address safety concerns, but also cater to consumers who increasingly want to stay connected on the Internet while driving.

“What we really have on our hands is a looming public safety crisis with the proliferation of these vehicles,” said Yolanda Cade, a spokeswoman for AAA, whose Foundation for Highway Safety released the study on Wednesday. She characterized the rush to equip cars with Internet-enabled systems as “an arms race.”

The study is among the most exhaustive look to date at the new in-car technology and sets up a potential clash between safety advocates and the auto industry, given that automakers increasingly see profit potential in the new systems.

In some high-end luxury cars, like the BMW 7-series sedan, drivers can dictate e-mails or text messages. And some mainstream models are equipped with options that can translate voice messages into text. The Chevrolet Sonic compact car, for example, has a system that allows drivers to compose texts verbally on an iPhone connected in the vehicle.

More than half of all new cars will integrate some type of voice recognition by 2019, according to the electronics consulting firm IMS Research. The auto companies argue these systems are safer because they are hands-free.

“We are concerned about any study that suggests that hand-held phones are comparably risky to the hands-free systems we are putting in our vehicles,” said Gloria Bergquist, the vice president for public affairs at the Alliance of Automobile Manufacturers in Washington, adding that carmakers are trying to keep consumers connected without them having to use their hand-held phones while driving.

“It is a connected society, and people want to be connected in their car just as they are in their home or wherever they may be,” she said.

In April, the federal government recommended that automakers voluntarily limit the technology in their cars to keep drivers focused. The federal agency that made the recommendation, the National Highway Traffic Safety Administration, did not respond to a request for comment about the research showing the potential risks even when drivers are looking ahead with hands on the wheel.

What makes the use of these speech-to-text systems so risky is that they create a significant cognitive distraction, the researchers found. The brain is so taxed interacting with the system that, even with hands on the wheel and eyes on the road, the driver’s reaction time and ability to process what’s happening on the road are impaired.

The research was led by David Strayer, a neuroscientist at the University of Utah who for two decades has applied the principles of attention science to driver behavior. His research has showed, for example, that talking on a phone while driving creates the same level of crash risk as someone with a 0.08 blood-alcohol level, the legal level for intoxication across the country.

In this latest study, he and a team of researchers compared the impact on drivers of different activities, including listening to a book on tape or the radio, and talking on a hand-held phone or hands-free phone.

The researchers compared how the subjects performed when they were not driving with two other conditions: when using a driver simulator and in a car equipped with tools aimed at measuring how well they drove. The researchers used eye-scanning technology to see where driver attention was focused and also measured the electrical activity in the brain.

Mr. Strayer said the results were consistent across all the tests in finding that speech-to-text technology caused a higher level of cognitive distraction than any of the other activities. The research showed, for instance, that the person interacting with speech to text was less likely than in other activities to scan a crosswalk for pedestrians. And that driver showed lowered activity in networks of the brain associated with driving, indicating that those networks were impaired by the interaction with the technology.

Mr. Strayer said that the reason for the heavy load created by the technology was not totally clear. One reason appears to be the amount of effort required to talk to the dashboard, which is greater than talking to a person, who can interrupt and ask for clarification.

With a passenger or even on a phone, the other person says “wait, wait, I didn’t understand,” Mr. Strayer said. “That stuff is gone when you’re trying to compose an e-mail. You have to get your thought in order and lay it out in order.”

Mr. Strayer said the research should give automakers pause. “Look at new cars; they’re enabling sending e-mails, sending text, tweeting, updating Facebook, making movie or dinner reservations with voice commands,” he said. “The assumption is if you’re doing those things with speech-based technology, they’ll be safe. But they’re not.”

But the automakers aren’t likely to slow down development of the technology unless the law forbids it, said Ronald Montoya, consumer advice editor for Edmunds.com, a research firm.

“They’re not going to pause based on this research,” he said.

Article source: http://www.nytimes.com/2013/06/13/business/voice-activated-in-car-systems-are-called-risky.html?partner=rss&emc=rss

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G.M. to Invest $5.2 Billion in Opel Through 2016

April 10, 2013 by Leave a Comment

GM is aiming for a slight improvement in its European business this year, but not enough to avoid a 14th straight annual loss as car sales on the continent plunge to their lowest in almost two decades.

Speculation has persisted that GM might shift Opel’s assets off its balance sheet into a joint venture with struggling French ally PSA Peugeot Citroen, or even sell Opel entirely.

“As a global automotive company, GM needs a strong presence in Europe – both in design and development as in manufacturing and sales,” GM Chief Executive Dan Akerson told reporters at Opel’s headquarters in Ruesselsheim.

“Opel is key to our success and enjoys the full support of its parent company,” he added.

When asked specifically whether the 4 billion euro investment pledge guaranteed that Opel would remain a fully-owned unit of GM through 2016, Akerson declined to comment.

But his top lieutenant, Opel Chairman Steve Girsky, told Reuters that speculation of a disposal was unfounded.

GM’s board met in Ruesselsheim to examine progress in the brand’s turnaround plan dubbed “DRIVE!2022” and the difficulties faced by Europe’s auto industry.

The company’s adjusted operating loss in Europe widened to $1.8 billion last year from $700 million in 2011 and it only expects to achieve profitability in the middle of the decade.

New product launches should help it meet that goal, with Opel planning 23 new models including the upcoming Cascada cabriolet and 13 new engines.

GM’s problems in Europe are anything but unique.

Fiat Chief Executive Sergio Marchionne said the company’s losses in Europe could be worse than expected this year. According to industry estimates, western Europe’s car market shrunk by roughly 10 percent in the first quarter.

Earlier on Wednesday, German premium carmaker Daimler said it may cut its 2013 profit forecast this month given the alarming rate at which Europe’s car market is declining.

The current double-digit drop in car demand is all the more remarkable given that 2012 volumes had already plumbed lows not seen in 17 years. (1 = 0.7658 euros)

(Reporting By Christiaan Hetzner)

Article source: http://www.nytimes.com/reuters/2013/04/10/business/10reuters-gm-opel.html?partner=rss&emc=rss

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French Automakers’ Biggest Problem Is the French Consumer

January 30, 2013 by Leave a Comment

Two of the workers were busy refining their already considerable skills at an auto-racing video game.

Down the avenue at the Renault showroom, business was hardly brisker.

Only at the nearby Mercedes-Benz showroom, displaying German automotive arts, was there much sign of life.

The dormant French dealerships signify the main problem facing the country’s auto industry: Consumers in France do not seem very interested in French cars. Or any cars at all, in many cases.

In France, vehicle sales last year were the lowest in 15 years, falling below 1.9 million from a 2009 peak of 2.3 million, according to Georges Dieng, an analyst at Natixis Securities. And even those who are prospective buyers often prefer non-French makes.

Esther Cintract, 40, a banker who takes the Métro to commute into Paris, owns a 10-year-old Citroën. For her next car, she said, she would consider switching to a German model: a Volkswagen, a BMW or a Mercedes.

But many younger French people have other priorities. “I’ve never had a car,” said Jean-Victor Mareschal, 30, who works at a bookstore in Paris. “I don’t need one. I ride a bike, walk or take the Métro.”

In contrast to the United States, where carmakers had a bumper year, France’s 2012 sales fell by 13.9 percent, outpacing the 8.2 percent decline in the overall European market, according to the European Automobile Manufacturers’ Association. Industry officials expect another gloomy year in 2013.

The flagging appetite of consumers is a significant economic problem for France. Its auto industry, dominated by Citroën’s parent, PSA Peugeot Citroën, and Renault, directly employs about 220,000 people; thousands more jobs depend on it indirectly. The government, which owns a 15 percent stake in Renault, has called the sector a strategic priority, and plays an active role — some might say actively meddles — in the industry’s affairs.

The downturn is not France’s alone. In 2007, before the global financial crisis, the overall European market peaked at just under 16 million newly registered passenger vehicles. Last year, the figure had fallen to just over 12 million, according to the European Automobile Manufacturers’ Association.

Wherever the market bottoms out, French automakers, like many European manufacturers, have more factory capacity and workers than they can profitably use. And that may be the case for years to come — especially in France, where the job-cutting plans announced so far by Renault and PSA Peugeot Citroën have been criticized by many analysts as insufficiently daring, even as they encounter fierce resistance from workers and, in some cases, government officials.

But it is a showdown that appears to be increasingly unrelated to the French market’s demands. Philippe Houchois, head of European auto industry research at UBS in London, noted that most vehicle purchases in the developed world over the last five years had been to replace older cars, with only 2 percent of car sales in the United States and Europe representing net additions to those regions’ consumer fleets. In emerging markets, by contrast, 70 percent of new-car sales represented additions to the total stock, Mr. Houchois said.

But even replacement demand is under threat in Europe. As the population ages, car owners drive less, reducing wear on their vehicles. And today’s cars last much longer than they did a few decades ago.

Generational change also bodes ill for the industry. Carmakers can be confident that many of those who adopt the car-based lifestyle early will stick with it for life. But the younger customers the industry covets are less interested in driving than they used to be — particularly, it seems, in France and especially in trendsetting Paris.

“In my parents’ generation, pretty much everyone drives,” said Mr. Mareschal, the bookstore employee. “With my generation, it’s a lot less important. I’m not anti-car, but it’s something I just don’t care about.”

Being able to go without a car may seem like a luxury available mainly to city dwellers, but even outside the cities, interest in auto ownership seems to have flagged.

Article source: http://www.nytimes.com/2013/01/30/business/global/french-automakers-biggest-problem-french-consumers.html?partner=rss&emc=rss

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DealBook: Ally to Sell International Operations to G.M. for $4.2 Billion

November 22, 2012 by Leave a Comment

An Ally Financial building in Charlotte, N.C.Chris Keane/ReutersAn Ally Financial building in Charlotte, N.C.

Ally Financial‘s international operations are about to find a new home — with the lender’s former parent, General Motors.

Ally agreed on Wednesday to sell its European and Latin American businesses, as well as a share of a joint venture in China, to G.M.’s financial arm for about $4.2 billion.

The sale is the latest effort by Ally to raise money to help pay back its government bailouts, made to help prop up a company struggling under the weight of souring mortgages. The Obama administration pumped money into the firm as part of its bailout of the auto industry in 2009.

Since then, Ally has stabilized, largely by focusing on its online banking operations. But it remains largely a ward of the federal government, which owns about 74 percent of the company’s common shares and $5.9 billion worth of convertible preferred securities.

(The Treasury Department has recovered about $5.9 billion from its investment in Ally thus far, largely by selling shares and receiving dividend payments.)

The lender has sought to go public, but struggled with what it said were unfavorable market conditions, delaying its efforts to repay the government. So it has turned to asset sales to raise cash, selling off a Mexican insurance division for $865 million and its Canadian arm for $4.1 billion.

But the sale of its remaining international operations is its biggest yet.

“Our goals were to find the best solution for each of the businesses, while also maximizing shareholder value, and we believe those goals have been achieved,” Michael A. Carpenter, Ally’s chief executive, said in a statement.

G.M., which sold Ally — then known as GMAC — six years ago, had long been considered the leading buyer of Ally’s international businesses. It is striking the deal through its G.M. Financial arm, built in part through its 2010 acquisition of AmeriCredit for $3.5 billion. Through Wednesday’s transaction, G.M. will add international financing operations.

The operations being sold include auto finance units in Germany, Britain and Brazil, totaling some $16.1 billion in assets.

“G.M. is entering the most aggressive rollout of new vehicles in its history, and this acquisition will make us an even more formidable competitor by ensuring that competitive financing is available to our customers and dealers around the world,” Dan Ammann, the company’s chief financial officer, said in a statement.

G.M. is paying a premium to tangible book value of about $550 million.

Ally was advised by Citigroup and Evercore Partners, while G.M. was advised by Bank of America Merrill Lynch and Barclays.

Article source: http://dealbook.nytimes.com/2012/11/21/ally-to-sell-international-operations-to-g-m-for-4-2-billion/?partner=rss&emc=rss

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Ford Names an Operating Officer Who Is Seen as a Possible New Chief

November 2, 2012 by Leave a Comment

The management changes solidified a closely watched succession race at Ford, the nation’s second-largest automaker, and reassured investors concerned about a premature departure by Mr. Mulally.

The decision to promote Mr. Fields was made by Ford’s board at its Oct. 19 meeting and was announced Thursday by Mr. Mulally and William C. Ford Jr., the company’s executive chairman.

In addition to naming Mr. Fields as chief operating officer, the company also said its Asia chief, Joe Hinrichs, would take over as president of the Americas division, which has been providing the bulk of Ford’s profit this year.

Mr. Mulally said he would assume a more strategic role at Ford and turn daily operations totally over to Mr. Fields, who he said had excelled during his seven years overseeing the all-important Americas division.

“The really key message today is that Mark is going to take responsibility for leading the business plan reviews of the whole company,” Mr. Mulally said. “I’m going to step back from that.”

By elevating Mr. Fields, the board gave him a running start to ultimately succeed Mr. Mulally. But some industry analysts say they believe the competition for the top job is not over.

Mr. Ford would not comment on whether Mr. Fields was in line to be the next chief executive. But he said it was even more likely now that Mr. Mulally’s successor would come from inside the company.

“I’ve said in the past I prefer it comes from inside, and I still see that,” Mr. Ford said.

It was Mr. Ford who reached outside the auto industry in 2006 to hire Mr. Mulally, who was then a senior executive at Boeing. Despite questions about his inexperience in the car business, Mr. Mulally transformed Ford from an unprofitable, regionally divided company into one of the most efficient and profitable automakers in the world.

This week, Ford reported third-quarter net income of $1.63 billion, its 13th consecutive profitable quarter. The company also recently announced a major reorganization of its European operations and an acceleration of investments in its Asian division.

Mr. Mulally said he expected to focus on new products, technology and strategic initiatives to further globalize Ford’s vehicle development and marketing.

He said he was asked to stay as chief executive for at least two more years by the board and Mr. Ford.

Mr. Ford reiterated earlier statements that he would prefer to keep Mr. Mulally at Ford indefinitely but that promoting other executives was important to the development of the overall management team.

“The strength of our people and stability of our team are competitive advantages for Ford,” Mr. Ford said. “We are fortunate to have Alan’s continued leadership as well as talented senior leaders throughout our company who are developing and working together and delivering our plan.”

Mr. Fields’s promotion to the chief operating officer position, which has been vacant for several years, is effective Dec. 1. Mr. Hinrichs will succeed him in the Americas job, and the Asia position will be filled by David Schoch, who currently leads Ford’s China operations.

Two other executives also were given enhanced job titles and responsibilities. Stephen Odell, head of European operations, was named an executive vice president and given added oversight of Ford’s business in Africa and the Middle East.

James Farley, head of global sales and marketing, was also promoted to executive vice president and assigned the additional duty of leading the revitalization of the Lincoln luxury brand.

The challenge for Mr. Mulally will be in ceding direct control of main subordinates to Mr. Fields, while still steering Ford through its European restructuring and Asian expansion.

“I have not had a C.O.O. before, but I am really looking forward to nurturing and supporting Mark and his team,” Mr. Mulally said.

Mr. Fields was not available for comment on Thursday. In a recent interview, he refused to talk about his future prospects at Ford or what changes he might implement if he was promoted.

Analysts said he has risen in Ford because of his discipline on costs and expertise in the production and delivery of new vehicles. “Mark Fields earned his stripes both on the cost side and the revenue side,” said Michelle Krebs, an analyst with the auto research site Edmunds.com.

But one analyst said Mr. Fields’s new role did not preclude the Ford board from selecting Mr. Hinrichs or another member of the revamped team to become the next chief executive.

“The next Ford C.E.O. is truly up for grabs,” Adam Jonas of Morgan Stanley wrote in a research note. “We believe Ford is keeping its options open.”

Article source: http://www.nytimes.com/2012/11/02/business/fords-chief-executive-to-remain-through-2014.html?partner=rss&emc=rss

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The Caucus: Chrysler Chief: Jeep Production Isn’t Moving to China

October 30, 2012 by Leave a Comment

Chrysler’s chief executive on Tuesday strongly refuted claims that production of Jeeps would shift to China, an insistence that cast further doubt on the Romney campaign’s recent efforts to undercut President Obama’s support for the auto industry as it fights for Ohio’s 18 electoral votes.

In an e-mail to employees, the chief executive, Sergio Marchionne, said that Jeep’s commitment to the United States was unequivocal. “I feel obliged to unambiguously restate our position: Jeep production will not be moved from the United States to China,” he wrote. “It is inaccurate to suggest anything different.”

Mr. Marchionne’s response — an unusually forceful gesture from the chief executive of a major American corporation a week before Election Day — came as the politics of the auto bailout took center stage in the presidential campaign.

The Romney campaign has come under considerable criticism in recent days for taking liberties with the facts in a new television commercial that suggests Jeep, a recipient of federal bailout money, will soon outsource American jobs to China. Chrysler, Jeep’s parent company, does not in fact have plans to cut its American work force but is considering opening a facility in China where it would produce Jeeps for sale locally.

Mr. Marchionne said that those efforts would only bolster the strength of Chrysler in the United States, not undermine it.

“Jeep is one of our truly global brands with uniquely American roots. This will never change,” he said.

The politics of the auto bailout have become a vexing problem for Mr. Romney as he competes fiercely with President Obama for Ohio. Mr. Obama carried the state in 2008 with just 51.2 percent of the vote and has remained ahead of Mr. Romney in many recent polls, a strength that is due in some measure to the rebound of the auto industry.

Mr. Romney opposed the bailout, most famously in a New York Times op-ed that carried the headline “Let Detroit Go Bankrupt.” Mr. Romney did not write the headline; the newspaper did. But even his supporters in the Midwest have questioned his logic in arguing that Chrysler and General Motors should have been denied federal assistance, which he deemed at the time “a handout.”

The Romney campaign has insisted that its most recent ad — which is carefully worded enough that it is not factually inaccurate — merely states the truth: that Jeeps are not currently made in China but will be soon. But the ad makes no mention of the point Mr. Marchionne and others have made, which is that no American jobs will be lost.

The Romney campaign has shown no signs of backing away from the ad. In fact, it is now repeating the same claims in a new radio commercial.

The memo from Mr. Marchionne is below:

[Read more…]

Article source: http://thecaucus.blogs.nytimes.com/2012/10/30/chrysler-ceo-jeep-production-isnt-moving-to-china/?partner=rss&emc=rss

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Working For Less: U.S. Manufacturing Gains Jobs as Wages Retreat

December 30, 2011 by Leave a Comment

That is particularly true of global manufacturers like General Electric. With labor costs moving down at its appliance factories here, the company is bringing home the production of water heaters as well as some refrigerators, and expanding its work force to do so.

The wages for the new hires, however, are $10 to $15 an hour less than the pay scale for hourly employees already on staff — with the additional concession that the newcomers will not catch up for the foreseeable future. Such union-endorsed contracts are also showing up in the auto industry, at steel and tire companies, and at manufacturers of farm implements and other heavy equipment, according to Gordon Pavy, president of the Labor and Employment Relations Association and, until recently, the A.F.L.-C.I.O.’s director of collective bargaining.

“Some companies want to keep work here, or bring it back from Asia,” Mr. Pavy said, “but in order to do that they have to be competitive in the final prices of their products, and one way to be competitive is to lower the compensation of their American workers.”

The shrunken pay scale for newcomers — $12 to $19 an hour versus $21 to $32 an hour for longtime workers — threatens to undo the middle-class status of even the best-paid blue-collar jobs still left in manufacturing. A similar contract limits the wages of new hires at a nearby Ford Motor Company stamping plant, but neither G.E.’s 2,000 hourly workers nor Ford’s 2,900, nor their unions nor the mayor, Greg Fischer, have objected.

Quite the contrary, all argue that job creation must take precedence over holding the line on wages, given that the unemployment rate in this Ohio River city is above 9 percent and several thousand people apply for every unfilled, $13-an-hour factory job. “The trade-off is absolutely worth it,” Mayor Fischer said, arguing that while the city is actively subsidizing G.E.’s expansion here, mainly through tax rebates, that is not enough. “You must have a globally competitive wage to create jobs,” the mayor insisted.

The generational setback implicit in a “globally competitive wage” is evident at G.E.’s Appliance Park, the complex of factories where G.E. makes refrigerators, washing machines, dishwashers and other household appliances. Six years into the adoption of lower wages for new hires, half of the hourly workers are paid at the reduced scale.

In an earlier era, that would have been a source of friction, perhaps protest. Now it isn’t, and in an interview William Masden, 62, earning $31.78 an hour after 42 years at Appliance Park, attempted an explanation. The younger workers still get annual raises, he noted, and by the time they top out, he and his peers — the oldest baby boomers — “won’t be here any longer to remind them of what they are missing.”

Linda Thomas, 37, one of the first to be hired in 2005 under the new arrangement, amends that explanation. Her hourly wage, $18.19, has almost topped out, although it is nearly $14 an hour less than Mr. Masden’s. But she keeps silent. Too many unemployed people, she explained, would clamor for her job and her wage if she were to protest.

“You don’t want to rock the boat,” Ms. Thomas said. “You take a chance on losing everything you have if you do.”

Mr. Masden’s final years at G.E., doing safety checks, and Ms. Thomas’s willingness, however reluctant, to do equivalent work as a forklift driver at a much lower wage illustrate a big reason that General Electric decided to expand production here. A new hybrid electric water heater will be manufactured in Louisville in a factory now being renovated, rather than in China, where G.E. makes its current model. And some production of refrigerators is being repatriated, mainly from Mexico.

“We have gotten to a point where making things in America is as viable as making things any place in the world,” said James P. Campbell, president and chief executive of G.E.’s appliances and lighting division, citing the drop in labor costs as a crucial reason. “They are significantly less with the competitive wage,” he said, “and that is a big help.”

This article has been revised to reflect the following correction:

Correction: December 29, 2011

An earlier version of this article said that General Electric’s employment in America was slightly greater than that overseas.

Article source: http://www.nytimes.com/2011/12/30/business/us-manufacturing-gains-jobs-as-wages-retreat.html?partner=rss&emc=rss

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Chrysler to Add 1,100 Jobs in Toledo, Ohio

November 17, 2011 by Leave a Comment

The new jobs, to be filled in 2013, amount to more than half of the 2,100 that Chrysler committed to creating under the four-year labor agreement that its unionized workers ratified in October.

“We are taking a big step forward toward fulfilling that promise today,” Chrysler’s chief executive, Sergio Marchionne, said during a ceremony at the Toledo Assembly Complex.

The investment will allow the plant to build replacements for two small S.U.V.’s, the Jeep Liberty and Dodge Nitro. Mr. Marchionne said the Liberty replacement might instead be called the Cherokee, resurrecting a nameplate that Chrysler discontinued in the United States a decade ago but still uses elsewhere in the world.

Some of the S.U.V.’s built in Toledo will be sold overseas as Jeep expands its presence in Russia, China and other countries, Mr. Marchionne said.

“The horrible thing about Jeep is that it’s never had a chance to be exploited internationally,” he said. “It’s the best brand at Chrysler by a long stretch.”

Chrysler is one of several carmakers adding large numbers of jobs in the United States after years of steep employment declines in the auto industry. On Thursday, Toyota is scheduled to begin production at a new plant in Mississippi that will employ about 2,000 people.

The mayor of Toledo, Mike Bell, described Chrysler’s announcement as “the equivalent of a blood transfusion” for this heavily industrial city along the Michigan border.

Chrysler said it planned to spend $500 million on an expanded body shop and other upgrades to the Toledo plant, which currently employs about 1,800 people and will gain a second shift when the new workers are hired.

“Not only is the company continuing to invest in its facilities,” General Holiefield, a United Automobile Workers union vice president, was quoted as saying in a statement released by Chrysler, “but it is adding jobs and securing the future of our current work force by demonstrating its commitment to the workers who have contributed to the company’s remarkable turnaround.”

The new workers will be paid entry-level wages, which start at about $15 an hour, a little more than half as much as most Chrysler workers earn now.

During labor negotiations this fall, Chrysler sought to eliminate a 25 percent cap on entry-level workers that takes effect in 2015. The union rejected that request.

Chrysler already has about 2,800 entry-level employees, 12 percent of its hourly work force.

Mr. Marchionne has said he wanted to eliminate the two-tier wage system, which is widely disliked within the U.A.W. but has been instrumental in persuading the automakers to add jobs. He clarified Wednesday that he did not want to reduce current workers’ wages, but rather that he wanted the two-tier system to be phased out as all of the full-wage workers eventually retire.

Article source: http://feeds.nytimes.com/click.phdo?i=5336c25ada38c6d4fde34bdeb0970220

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Chinese Carmakers Agree to Buy Saab, Pulling It Back From the Brink

October 28, 2011 by Leave a Comment

Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade have agreed to pay €100 million, or $140 million, for Saab and its British unit, said Swedish Automobile, the parent company.

The deal remains dependent on the Chinese companies’ winning the approval of the authorities in Beijing, a requirement that torpedoed the efforts of a previous would-be rescuer, Hawtai Motor Group. But there have been hints that officials will look favorably on this effort.

The companies hope the commitment of new funds will provide Saab Automobile with the long-term funding it needs to update its product lineup and become competitive again.

Martin Skold, a scholar at the Swedish School of Economics in Stockholm who follows the auto industry, said it was too early to say Saab was saved.

“Saab is in great need of an enormous amount of money,” he said, estimating that it would take at least $800 million and possibly as much as $1.5 billion to turn it around. “We’ll have to wait to see how much the Chinese are willing to invest in it,” he added.

Saab was acquired from General Motors by Victor R. Muller, the Dutch entrepreneur behind Spyker cars and Swedish Automobile. But Saab, which has a long-established base of dedicated customers, has so far not been able to turn around its fortunes. Suppliers began cutting off credit in March, and Saab’s main factory in Trollhattan, Sweden, has not produced a car since the spring.

Youngman and Pang Da had previously agreed to invest a combined €245 million for a 54 percent stake, but negotiations dragged on, leaving Saab in an increasingly precarious state.

With employees unpaid for months, Saab’s unions began legal proceedings in September that could have put the company into bankruptcy. Mr. Muller sought and received court protection from creditors to gain time to complete the Chinese investments.

By the past week, it appeared that the final countdown had begun for Saab. The administrator in charge of the voluntary reorganization, Guy Lofalk, recommended to the court overseeing the case that the reorganization be halted.

Saab said Friday that Mr. Lofalk had “withdrawn his application to exit reorganization.” The agreement with the two Chinese companies is valid until Nov. 15, Saab said, provided the reorganization continues.

A woman answering the phone at the general manager’s office of Pang Da confirmed Friday that an agreement had been reached with Saab, but she had no comment on the details. A woman answering the phone at the general manager’s office of Youngman said that she had no information and that all senior people in the office were traveling and could not be reached for comment.

The Chinese authorities have said little publicly about their thoughts regarding the Saab negotiations. Reuters cited the Pang Da chairman, Pang Qinghua, as saying this month that he had received positive feedback from the authorities regarding the investment.

Another deal, General Motors’ planned 2010 sale of its Hummer unit to Sichuan Tengzhong Heavy Industrial Machines, failed after the Chinese Commerce Ministry, which must approve large overseas investments, refused to bless the deal. Hummer eventually shut down.

Keith Bradsher and Hilda Wang contributed reporting from Hong Kong.

Article source: http://feeds.nytimes.com/click.phdo?i=9459e1aec572df590ebc5b80c1bfaad5

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